Jane Kelsey: Pacific deal masks bigger plan

Governments may sign up for strategic reasons to a text designed by the US to serve its own interests.

Speculation around the TPP is likely to focus on whether Fonterra will get to sell more butter to the US. Photo / Michael Cunningham

The 15th round of negotiations for the Trans-Pacific Partnership agreement begins today in the SkyCity Convention Centre. Around 500 negotiators from 11 countries, including the United States, Canada, Australia and New Zealand, will spend the next 10 days behind closed doors trying to make progress on 29 chapters in this mega- "free trade" deal.

Few New Zealanders will know this event is taking place, let alone the significance that an agreement purportedly about "trade" has for many aspects of everyday life, from affordable medicines, access to the internet and food labelling to smoke-free strategies, new health and safety rules to prevent more Pike River catastrophes, or re-regulation of shonky finance companies.

Speculation around the TPP is likely to focus on whether Fonterra will get to sell more butter to the US, whether the big drug companies will be able to undermine Pharmac and whether foreign investors will be permitted to sue the Government in private overseas tribunals.

These are all important questions. But they are dwarfed by the bigger game plan that explains the US drive to secure this agreement. The commercial ambition, articulated by Trade Representative Ron Kirk, is "to build what will become the largest, most dynamic trade collaboration of our time", producing "a new 21st century gold-standard trade agreement".

However, the TPP is not simply, or even principally, about trade. There is a well-documented push from the US to secure extensive new rules that will serve the interests of their corporations and empower them to enforce those rules.

But it is increasingly clear that US politicians see the TPP as a vehicle to re-establish America's ascendancy in the Asia-Pacific region to counter China's emergence as a superpower.

In the US election campaign, candidates Barack Obama and Mitt Romney competed to demonise China, and hailed the TPP as the pivot of their containment strategy.

Romney endorsed the TPP as a "dramatic geopolitical and economic bulwark against China". Obama, describing his "pivot" towards the Asia-Pacific, said: "We're also sending a very clear signal that America is a Pacific power ... organising trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards. That's the kind of leadership we've shown in the region. That's the kind of leadership that we'll continue to show."

This followed speeches from Secretary of State Hillary Clinton that positioned the TPP as the economic limb of a two-pronged US offensive dubbed "America's Pacific Century". The second limb was the reassignment of US military presence from Iraq and Afghanistan to strategic allies throughout the region.

This poses a dilemma for New Zealand. The Government is ideologically committed to concluding this agreement and eager to cement closer ties with the US. At the same time, we have a growing economic dependency on both China and Asean.

Back in February, Trade Minister Tim Groser told Radio New Zealand: "If we in New Zealand smell or sense that this is an anti-China thing, we would leave TPP". Australia's trade minister reportedly said it would follow New Zealand out the door. The TPP is now undeniably "an anti-China thing" and we are still in there. Problematically for the Government, the stakes in relation to China have got even higher.

Two weeks ago, at the East Asian Summit, negotiations were launched for a Regional Closer Economic Partnership (RCEP), involving all the Asean countries, China, India, South Korea, Japan, Australia and New Zealand - but excluding the US.

The rhetoric is almost identical to the TPP, with predictions that "the RCEP will emerge as the world's largest free-trade zone, surpassing any existing regional FTA bloc ... given its inclusion of the most dynamic economies, its gigantic economic capacity and unparalleled market potential". The Taipei Times says "it is widely believed that the RCEP is Asean's counter-proposal in response to US-led Trans-Pacific Partnership".

Although Asean initiated the RCEP, China is clearly its driver, just as the US sets the terms for the TPP. In seeking to reconcile our participation in both negotiations, Prime Minister John Key said he did not want to "over-emphasise" the China-US stand-off. Groser optimistically believes that the two mega agreements can converge to form a compatible Asia-wide integration arrangement.

Whether or not you think that is desirable, it ignores both geopolitical realities and the divergent paradigms on which China and the US operate.

A serious risk is that governments participating in the TPP will sign up for strategic reasons to a text designed by and for the US to serve its commercial and foreign-policy interests. As a result, New Zealand and Australia, alongside Singapore, Malaysia, Brunei and Vietnam, who are members of Asean, will become caught up in a new Cold War, conducted through the proxy vehicle of economic integration agreements.

Jane Kelsey is a professor of law at the University of Auckland.

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